Fast forward to 1998. Klassa was smart and actually left grad school
with an MS in 1992 to get a job and start a family. I on the other hand
didn't know enough not to throw good money after bad, and have basically
spent the entirety of the 1990s in graduate school. And yet, if I had
just gone to Microsoft in 1990 to work on Windows 3...
> Someone who had received a grant of 1,500 stock options in 1990 and
> exercised them today would -- courtesy of six splits and a 3,400% rise
> in Microsoft's share price -- realize a gain of more than $5.5 million.
I've often wondered what it cost me to forget about life for my
20something slacker decade to pursue a PhD. Now I know. Five point
five million. Shucks, even if you don't care about money, is *anything*
worth giving up five point five million for?
T-minus-one-week until I go to Bill Gates' house for dinner.
T-minus-two-weeks before I have to surrender my badge and can no longer
get Microsoft software discounts at the company store (if anyone has any
more requests, tell me now.)
Full article follows...
> America 1998: High on Stock Options: At Microsoft, a War Smolders
> Between Haves and Have-Nots
> by Lee Gomes, The Wall Street Journal, 08/10/98
> You can tell a lot about the people at Microsoft Corp. by the color
> of their ID badges.
> Permanent workers at the software company sport blue badges; temporary
> workers, orange. The two colors can signify minor differences, such as
> whether someone is entitled to attend a campus-sponsored guest lecture.
> (Blues only, please.) But the badges also say a great deal about the
> bank accounts of the people who wear them, and their access to Microsoft
> When it comes to options, the difference between blue and orange is an
> economic chasm separating Haves, like Bonnie Olvera, from Have-Nots,
> like Mark Wiitala. The gap in wealth is a rich source of Microsoft
> gossip. It also is a central issue in a longstanding, closely watched
> lawsuit concerning other stock benefits, which temporary workers have
> filed against the company.
> Microsoft options windfalls have led to untold early retirements at the
> Redmond, Wash., company -- or at least taken the edge off difficult
> personal circumstances. Consider 44-year-old Ms. Olvera, who is unlucky
> enough to work one of the handful of graveyard shifts at the Microsoft
> campus. Her job is to help post information on Internet pages that are
> part of Microsoft's news joint venture with General Electric Co.'s NBC
> network. She goes to work at 11 p.m. and gets home around 8 a.m. -- too
> late to see much of her husband before he leaves for work, but just in
> time to look after her two-year-old and her five-year-old while trying
> to catch up on her sleep.
> Yet Ms. Olvera, who makes $45,000 a year, is upbeat about her work life.
> In the early 1980s, she received a passel of Microsoft stock options
> when she took a typesetting job at the then-young company. She won't
> disclose how many, but says it was enough to allow her not only to make
> a down payment on a home, but also to get a head start on retirement. "I
> feel very fortunate," she says.
> Mr. Wiitala, a 36-year-old married father of three, missed the options
> lottery. A programmer for Microsoft's multimedia reference products, Mr.
> Wiitala has had several chances over the years to go full-time. But
> because contract workers often receive a greater hourly salary than
> permanent employees do, Mr. Wiitala opted to remain a "temp," and
> ineligible for Microsoft benefits. That meant turning down stock options
> in favor of roughly 25% extra in take-home pay.
> Microsoft is "able to get people to work for those low salaries because
> they think they can make it up on the stock," he says. "In hindsight, I
> would have made a lot more money on the stock, but it was a gamble I
> wasn't willing at the time to take."
> Five thousand of the roughly 19,000 workers at the Microsoft campus are
> classified as "contingent" or "temporary" workers, like Mr. Wiitala.
> They are actually on the payrolls of a handful of high-tech employment
> agencies, who also provide their benefits. They are ineligible for
> Microsoft stock benefits, including options and the stock-purchase plan
> -- even though they may have worked at Microsoft for years.
> Thanks to Microsoft stock, one of the great performers in Wall Street
> history, the wealth available to the company's employees can be
> eye-popping. It's still common for Microsoft to offer even lower-level
> new hires options on as many as 1,000 or 1,500 shares. Someone who had
> received a grant of 1,500 stock options in 1990 and exercised them today
> would -- courtesy of six splits and a 3,400% rise in Microsoft's share
> price -- realize a gain of more than $5.5 million.
> The stock purchase plan, which is one of the issues in the lawsuit,
> isn't quite the bonanza that stock options are -- but it too can be
> lucrative: Permanent employees get a 15% discount on Microsoft shares.
> Microsoft says it is legitimate to hire contract workers, and uses them
> in carefully proscribed situations. But some of the workers say the
> company uses them everywhere and for everything -- that they have been,
> in effect, regular employees and should be entitled to regular benefits,
> including the stock-purchase plan. One possible outcome of the suit,
> filed in 1993 in state court and now pending in U.S. District Court in
> Seattle, is that the software giant would have to grant contract workers
> millions of dollars in stock-purchase benefits retroactively.
> Microsoft is touchy about descriptions of its work force as a two-tier
> entity, noting that many contract workers are like Mr. Wiitala --
> well-paid and free to look for jobs elsewhere. "It's like saying we are
> hiring migrant farm workers and trying to keep them down," a spokesman
> But other contract workers at Microsoft say they never got the chance to
> go full-time in the first place. Marcus Courtney, a 27-year-old software
> tester at Microsoft, says that whenever he brings up the issue of going
> permanent, supervisors tell him, "We can't have those kinds of
> Mr. Courtney stands to benefit if the temporary workers win the legal
> fight. The highly-publicized and complicated case dates back to the late
> 1980s, when Microsoft first employed workers it dubbed "independent
> contractors." The Internal Revenue Service successfully challenged their
> status, and soon after the workers sued. The Seattle law firm Bendich,
> Stobaugh & Strong is handling the matter.
> While it once appeared Microsoft was coming out ahead, that may no
> longer be the case. The five-year old fight has gone all the way to the
> Supreme Court -- which earlier this year declined to hear a company
> appeal of an adverse ruling. A lower-court ruling last month was
> sufficiently ambiguous, said Marc D. Freedman, a Ramsey, N.J., attorney
> specializing in contract-worker labor law, that a Microsoft victory
> isn't a sure thing.
> Which raises the question: If the temp workers win their suit, what kind
> of retroactive stock-purchase rights should they get? Given the
> performance of Microsoft's stock, the issue is a bit like deciding how
> much someone should be allowed to bet on a lottery when the winning
> numbers are already known.
> Already, Microsoft is maneuvering to keep any retroactive stock-purchase
> award on the low side. A company spokesman, for example, notes that
> fewer than a third of the full-time employees from the late 1980s
> participated in the stock-purchase plan -- suggesting that while they
> may be skilled at making PC software, Microsoft workers aren't
> especially gifted stock-pickers.
The way to make a small fortune in the stock market is to start with a